Tax on sale of unregistered property

Hi Prakash,
Two questions:
1) Resale of unregistered property
I have booked a flat in JP Kosmos ,Noida in 2011 at the Price of 30 lacs (all inclusive).I had already paid around 24.5 lacs up to 2012.
Now,I have got the offer of Possession from JP and the final payment of 5.5 lacs Needs to be done before 31st Mar and go for registration process of the property.Also, I will be charged interest @12% for the period of delay in case there is a delay in final payment.
I am interested in selling the flat now and getting the deal of 40/41 lacs.Please let me know the tax implications if I sell this flat now..What are the different charges/taxes(capital gains tax) that I should consider before selling it.Also,how the taxes can be avoided.
2) Demand notice from Income tax
I have recieved demand notice from income tax ( CPC Bengaluru) relating to AY 2011-12 and AY 2012-13 for amounts of aroung 40K. I have already filled the income tax Returns for These two years on time and have the hard copy receipt for the same.I have already rejected the demands stating the same reason.
I am not sure why i have recieved These demands and what Needs to be done now and what happens if These demands are genuine and I dont pay them.
Thanks

Asked 9 months ago in Capital Gains Tax from Pune, Maharashtra

please look into the intimation issued under Sec.143 by the department for demand. only then you can decide on whether the demand is correct or not. May be there is a error in the return filed by you.

Hello Sir,
It is preferable if you check your Intimation u/s 143 as that will only show you why the demand has been raised.
Mere rejecting the demand will not help as they will adjust the demand against your refund in any of the future years.
Trust this clarifies your query.
Feel free to get back/ call back for any further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB - GEN, CERT. FAFP

Under Transfer of property act, transfer of immoveable property is not complete unless the sale deed is registered. There may be situations where the buyer has acquired the possession of the property and the seller has been paid the price for the sale even though the property has still not been registered in the name of the purchaser.
For the purposes of Capital Gains, ‘Part performance of a contract of sale’ falls within the definition of ‘Transfer’ as per 2(47) (v) of the Income Tax Act. The definition reads as below:
…
["transfer"32, in relation to a capital asset, includes
(v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A36 of the Transfer of Property Act, 1882 (4 of 1882) ;”
…
In the case of immoveable property, Transfer of property act considers a sale as complete only on registration of the sale deed. But Transfer of Property act also provides for certain allowed exceptions to this general rule. This exception is in the form of Sec 53A, which talks about part performance of the contract of sale of immoveable property and the rights of the transferee on the property concerned. It provides that where an immoveable property has been transferred and buyer has taken possession and has made or is willing to make the payment of purchase price, then even though the deed is not registered, seller cannot enforce against the transferee any rights in respect of the property. The wordings of Section 53A of Transfer of Property Act reads as below:
…
“Where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty,
…
and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract,
…
and the transferee has performed or is willing to perform his part of the contract,
…
then, notwithstanding that the contract, though required to be registered, has not been registered, or, where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract:
…
PROVIDED that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof.”
…
For the purposes of capital gains tax liability, if the following conditions are satisfied, we can conclude that the immoveable property has been sold:
Contract for Sale of immoveable property for consideration has been signed
The transferee has, in part performance of the contract, taken possession of the property
The transferee has performed or is willing to perform his part of the contract
The capital gains tax liability arises at the point when the above conditions are satisfied and not postponed until registration of the sale deed.
The sale consideration will be higher of the consideration in the contract of sale or stamp duty valuation of the property at the time when capital gains tax liability arises. If there is any increase in the stamp duty value of the property between date of transfer and date of registration, that change will not have any impact on the capital gains tax computed on the date of transfer

1. To compute capital gain taxes, it is important to figure out the date of acquisition of asset. The date of acquisition of asset will be the date on which allotment letter was issued to you. please share the same and we can assist you further.
2. please share the demand notice to figure out the reason that why it was issued to you. Have you received any intimation under section 143(1).?

Hi Abhishek,
Thanks for looking into my queries.
1) Regarding the capital gains tax query,I have got the provisional allotment letter from builder in Jan,2011.
In Mar,2016 ,I have got the offer of Possession from builder.I am planning to sell the flat in April,2016(Sale Agreement has already been done in Mar,2016-selling Price 41 lacs).Please let me know in case you Need any further Details.
2)Regarding the demand notice:
For AY 2012-13
I have got a computation sheet from IT department under Sec1431a which says:
1) Returned Income/loss : 483150
2)Assessed Income/Loss : 483150
.....11) Tax : 30,315
12)Education Cess:909
.....17)u/s 234B : 7488
18)u/s 234C : 1115
19) Total Interest due: 8643
20) Total Tax and Interest due :39867
I have also checked my Form 16 for AY 2012-13 and Details are as follows:
1) Gross Salary
a)Salry as per Provision
6) Income chargeable under the head Salaries(3-5) : 604398.05

Asked 9 months ago

Hi Abhishek,
Thanks for looking into my queries.
1) Regarding the capital gains tax query,I have got the provisional allotment letter from builder in Jan,2011.
In Mar,2016 ,I have got the offer of Possession from builder.I am planning to sell the flat in April,2016(Sale Agreement has already been done in Mar,2016-selling Price 41 lacs).Please let me know in case you Need any further Details.
2)Regarding the demand notice:
For AY 2012-13
I have got a computation sheet from IT department under Sec1431a which says:
1) Returned Income/loss : 483150
2)Assessed Income/Loss : 483150
.....11) Tax : 30,315
12)Education Cess:909
.....17)u/s 234B : 7488
18)u/s 234C : 1115
19) Total Interest due: 8643
20) Total Tax and Interest due :39867
I have also checked my Form 16 for AY 2012-13 and Details are as follows:
1) Gross Salary
a)Salry as per Provision
6) Income chargeable under the head Salaries(3-5) : 604398.05

Asked 9 months ago

10) Aggregate of deductible amount under Chapter VIA : 121250
11) Total income (8-10) : 483150
12) Tax on total income : 30315
and the tax payable (14-15) : 31224
In the IT return for AY 2012-13 ,I have filled in the same Details of income and tax..Please help me understand from where this demand has come

1. Considering the sale in March 2016 (if it is April 2016 amount of capital loss will increase - it nees to be determined based on possession of house and other things), your capital LOSS will be INR 31,210.
2. Salary - Did you employer deducted proper TDS and deposited to the Government. Apparently, it seems issue of TDS. You can check your 26 AS. If TDS is appearing in Form 26 AS, you can reply to the letter attaching Form 26 AS.
Please feel free to get in touch with us, if you require any help on the above matters
Regards,
CA Abhishek Dugar
caabhishekdugar@gmail.com

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